The 2016 general election is still more than two months away, but analysts are already speculating on how the regulatory landscape might be impacted should Hilary Clinton or Donald Trump win the White House.
When it comes to credit unions and their compliance issues, experts say both candidates poised to roll back current regulations. Republican presidential nominee Donald Trump has yet to release an in-depth analysis for his financial regulatory plans, leaving much to speculation. At the same time, Democratic nominee Hillary Clinton's proposed plans will most likely face tremendous opposition from the legislature and even from the Democrats as she attempts to convince them to scale back the Dodd-Frank Act championed by Democrats in 2010.
The Republican candidate has released very little in regards to economic and regulatory policy. In June of this year he met with House Finance Committee Chairman Jeb Hensarling (R-Texas) to
"I think that Trump has rhetoric and Clinton has more details…you can extrapolate from some of Trump's statements what he might do," said Thaya Brook Knight, associate director of financial regulation at the CATO institute, a Washington-based Libertarian think-tank.
Experts: Trump Lacks Substance
Analysts agree, the question remains how predictable a Trump presidency might be.
"He has not fleshed out whatever plans he might have…on a couple occasions he has cited Dodd-Frank, but I don't think he has provided the sort of detail Hillary Clinton has," said John McKechnie, senior partner at Washington-based Total Spectrum and former director of public and congressional affairs at the National Credit Union Administration.
Because Trump has never held public office during his lengthy business career, many pundits are unsure of what to expect from a Trump administration, whereas in Clinton's case there is a breadth of policy and positions that provide context when betting on the future.
"The problem is, Trump is kind of a wild card," said Geoff Bacino, partner at Alexandria, Va.-based Bacino & Associates and a former NCUA board member. "I think there is a real strong case to say he is going to probably be a little easier on [regulation]."
One policy the Republican candidate had proposed during his speech at the Detroit Economic Club in early August of this year was a complete moratorium on new financial regulations from agencies, achieved through executive order — a plan that Trump's vice presidential running mate Gov. Mike Pence instituted on his first day in office as governor of Indiana. Trump's promotion of the moratorium seems to be influenced by his VP choice.
CATO's Knight believes this type of moratorium could cause more uncertainty. The question also remains as to how such a move would affect the NCUA and other independent federal agencies.
"Even independent agencies like the NCUA still report to the White House in some manner," Bacino said, suggesting the regulator would most likely be compelled to follow a president's wishes. Bacino also noted if a Trump administration took the same approach as Pence's plan in Indiana, "most of the financial services industry would be grateful."
CUNA's Chief Advocacy Officer, Ryan Donovan, while not knowing the specifics of a regulatory moratorium, strongly supports a freeze on new CFPB regulations "to give credit unions time to recover from the onslaught of regulations they have experienced over the last seven years," he said.
If Trump wins in November and the Republicans retain control of both houses of Congress, Donovan suggested legislation like Chairman Hensarling's CHOICE Act, "probably gains more legs."
Clinton's Plans Face Uphill Battle
In late August Clinton released an
"If you look at Clinton's plans she's really doubling down on what has been done so far, I would expect to see a continuation of Obama policies," said Knight. "I don't think either of the candidates are presenting what we need, which is a commitment to challenging the view of financial regulation we have had from 2002 and on," she added.
One area where Knight did agree with the Democratic candidate was to no longer allow financial institutions to avoid losses from risk through bailouts. "The risk can cause downturns, but if they fail it can clear the deck for a more innovative company with new ideas," Knight said.
Industry veteran McKechnie stated that although there is a consensus that Hillary's plans have "a lot of positives," what she will do with the Consumer Financial Protection Bureau remains to be seen. "The CFPB has become overwhelmingly a focus of credit union concerns on regulatory burden," he said.
In an uncommon move, credit unions were mentioned directly in Clinton's policy, which is a testament to the work the industry has done in the past, insiders claimed.
"It was impressive that credit unions have gotten on the map to the extent that candidate Clinton decided to mention us so prominently in her position paper," McKechnie said.
House and Senate Shake-ups
The contentious battle for the presidency is also paired with a toss-up in the Senate and a slim, yet plausible, chance of a majority change in the House.
Some of the plans presented by the presidential candidates hinge on cooperation from the legislature, which will be nothing short of a challenge as the U.S. closes out one of the most deadlocked and unproductive legislative sessions in the country's history.
The expert consensus is the Republicans are likely to retain control of the House after the election, leaving Hensarling as Chairman of the House Financial Services Committee. If Democrats do end up with control, the likely candidate for chairmanship is Rep. Maxine Waters (D-Calif.). But as Brad Thaler, VP of legislative affairs at the National Association of Federal Credit Unions noted, leadership positions are not a guarantee and are decided by the respective caucuses.
In the other house, the Senate is poised for a shakeup that could put Democrats in control by a slim margin, or possibly a situation where the Vice President becomes the deciding vote.
With a Democratic-run Senate, CU insiders have suggested that current ranking minority member Sen. Sherrod Brown (D-Ohio) would likely be appointed as Chairman of the Senate Banking Committee.
If Republicans retain control of the Senate, Chairman Richard Shelby (R-Ala.) would be ineligible to continue in the chairmanship due to term limits imposed by the Republican caucus for leadership positions. The next likely candidate, according to NAFCU's Thaler and CUNA's Donovan, would be Sen. Mike Crapo (R-Idaho), who was ranking member on the committee in the last session. Thaler suggested that both possibilities, a Brown- or Crapo-run Banking Committee, bode well for legislation.
"They both have a record in the past of trying to work together across the aisle," he said.
Stalled Nominations
One of the more well-known issues surrounding the deadlock in Congress has been the nominations which have stalled in the Senate Banking Committee,
In spite of this, the possibility of the nominations being thrown out by a new administration — on both sides of the aisle — is also an option.
Thaler is hopeful to see "movement" on legislation next year, especially when it comes to relief for credit unions.
"[We] saw bipartisan majorities of both the House and Senate send letters to the CFPB talking about regulatory relief," he said, something he suggested showed growing support for the issue.
